I’ve been invited to sit on a judging panel at a pitch session being held on Friday by the Mobile Enterprise Growth Alliance (MEGA).
Over the past 4 months, 10 teams of entrepreneurs have been mentored through the process of fine tuning their business concepts, and the pitch session is designed as a dress rehearsal before these entrepreneurs unleash their ideas on potential investors.
As I prepare for the judging process, I thought I would share some of my thoughts and experiences of the ‘startup scene’:
- The average startup is launched by a ‘specialist’ – someone with deep skills in a specific area (be it coding, marketing, product development etc.) but shallow/no skills in other ‘must have’ areas (business planning, marketing strategy, customer orientation, financial discipline etc.).
- Startup founders tend to play to their strengths – founders with a coding background get stuck into the code, and give little attention to defining the market, developing a robust business model etc. People with a business background do the exact opposite – they write reams of pages about the market, business opportunity, revenue potential etc., but do very little prototyping and market validation.
- Startup founders are, by definition, optimists – they underestimate how long it will take or how much it will cost to secure their first customer, break even etc.
- Startups have little cash, but, equally, can ill-afford not to seek assistance. The corollary is that getting advice can actually reduce time to market, which conserves cash and is thus capital positive.
- Australia is a very ordinary market for early stage startups – the sooner you can progress your start-up through ‘Death Valley’ and gain the size/momentum needed to interest VCs, the more likely you are to survive (even if you opt not to accept VC money).
- There is never a shortage of money. Money will always find good investments. The problem is that most investment opportunities are rarely well refined and usually poorly presented.
- Most startups, being run by ‘specialists’, have very poorly developed investment propositions. The business plan + pitch documents tend to steer to the founder’s strengths. Tech types talk all about the technology, and don’t drill into the market + the business case for the investor. Business types talk all about the business, but don’t drill down into how the product will be developed and brought market.
- A key contributor to some of these problems is the type of people start-up founders typically turn to for guidance – accountants and lawyers. In the main, accountants think start-up planning is all about mapping and monitoring cashflow, and lawyers think it is all about legal protection of ideas, IP and contractual rights. While undoubtedly important aspects of new businesses, there are larger issues that need to be addressed in most startups as they take their first steps to market.
Of course, simply articulating these problems doesn’t solve them. I’m currently working on a side project with several colleagues aimed at just that: helping entrepreneurs (and would-be entrepreneurs) to help themselves in overcoming these and other challenges that crop up in the first years of life in a start-up.
Hopefully I’ll be in a position to announce something more formally soon.